CANADA FX DEBT-Canada dollar steady despite oil-price jump

Fri Jun 13, 2014 10:01am EDT
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* Canadian dollar at C$1.0861, or 92.07 U.S. cents
    * Rising oil prices fail to boost currency
    * Bond prices mixed

    By Andrea Hopkins
    TORONTO, June 13 (Reuters) - The Canadian dollar was little
changed against the U.S. dollar on Friday despite a rise in oil
prices as increasing violence in Iraq spurred a flight to
safety, while hawkish comments by the Bank of England pushed
sterling higher.
    Oil prices surged, with Brent crude slicing through $114 a
barrel at one point to a nine-month high and U.S. crude touching
as high as $107.68. Both benchmarks looked set to gain almost 5
percent this week, the biggest weekly rise since July 2013.
    While there have been no disruptions to oil supplies so far,
a move by Sunni Islamist militants towards Baghdad has made
investors nervous. Higher oil prices often push up the
resource-linked Canadian dollar but the impact on the currency
on Friday was limited.
    "It's been a quiet overnight session, just 11 points, which
is a bit surprising given what we're seeing in oil markets. The
correlation between oil prices and geopolitical risk is not
carrying through to the Canadian dollar," said Ken Wills,
currency strategist and broker at CanadianForex in Toronto.
    "We may see a bit more carry-through if there is an
international response (in Iraq)."
    At 9:41 a.m. (1341 GMT), the Canadian dollar was at
C$1.0861 against the U.S. dollar, or 92.07 U.S. cents, little
changed from Thursday's close of C$1.0855 against the greenback,
or 92.12 U.S. cents.
    Wills said he expected the Canadian currency to remain in a
tight range in quiet trade on Friday but said the loonie could
benefit if upward pressure on oil prices persists.
    He said the Canadian dollar showed no reaction to the
election of a majority Liberal government in Ontario, Canada's
most populous province, on Thursday.  
    Sterling surged on Friday after Bank of England Governor
Mark Carney said late on Thursday that British interest rates
could rise sooner than financial markets had expected, in a
surprisingly stark warning that monetary policy may start to
tighten before the end of this year.
    That's a contrast to the Bank of Canada, whose governor,
Stephen Poloz, said on Thursday that inflation pressures in
Canada remained low. The dovish tone has prevented the loonie
gaining much ground against the greenback.
    Canadian government bond prices were mixed across the
maturity curve, higher on the short end and lower on the long.
The two-year was down 4.5 Canadian cents to yield
1.103 percent and the benchmark 10-year bond was
down 20 Canadian cents to yield 2.339 percent.

 (Reporting by Andrea Hopkins; Editing by Peter Galloway)